 Hello and welcome to the World Economic Forum in Davos and this special debate on France 24 today We're discussing the 240 billion dollar a year problem of tax avoidance in a year when yet again The Paradise papers showed us that the global tax system appears to be broken We're asking if global tax avoidance can be stopped this at a time when the global tax system is undergoing a major shift with the US slashing corporate rates and other governments struggling to tax major digital companies Well to discuss this I'm joined by David Sarah CEO of Algebra's investments from Ireland the Minister for Finance Public Expenditure and Reform Pascal Donahue from Oxfam International Executive Director Winnie Biennima From the European Commission Pierre Moscovici Commissioner for Taxation and Economic Affairs and the Nobel Prize winning economist professor Joseph Stiglitz of Columbia University Thank you to you all for joining us This is not a new issue We know that there have been efforts made to tackle this in the past one of the efforts We have had in the past year is the European Union publishing its blacklist of tax havens Pierre Moscovici, I'm going to start with you. We started out with 17 countries on that list. It's coming down now To nine. Is this an effective system? Well first I would like to say that you said the tax system was broken There are problems, but we are trying to solve them and I see huge changes for the last five years with the OECD BEPS initiative the G20 we work and what we've done Inside the EU for example two directives on anti tax avoidance or the exchange of information For tax rulings which was the answer to a previous scandal those candles are useful because they push us to decide and The blacklist is probably the most spectacular thing we've done, but it's not the most important I will come back later on CCCTB, which is a major breakthrough when we talk about taxation or our intention to make proposals to tax the digital economy and these proposals will be on the table in March But to come back to the list this question is more for Pascal than for me because it's not the Commission's list It's the member states list. I understand that when you take out of a list of 17 one month after eight countries There is a problem of credibility. You can't see that that way There is another way to see it which is to say, okay It proves that it has a dissuasive effect and that it convinces Some countries to make commitments. They didn't make initially In order to get to a better tax governance Those countries made those commitments The code of conduct group which is going to approve that the ministers decided to take those countries out of the blacklist but One thing which must be clear is that they are not totally out of the screening not at all They enter into a gray list the gray list is a list of countries Which have made commitments and these commitments are not vague promises either They are Implemented and then they get out of any list or they are not implemented and then they get back to blacklist And we must define Sanctions on that I will take an example in a few minutes from now I will have a meeting with the president of Panama on his own request And I welcome this dialogue Panama has taken commitments and this has led the ministers to say, okay It's no more on the blacklist, but it's in the gray list and my message to the president of Panama will be a friendly one You've taken commitments These commitments must be seriously implemented or else in one year from now We'll come back to the blacklist and so the list is not one day forever It's a moving process and the credibility of the process will be shown by first perpetual screening Second movements in the lists third transparency and I asked the minister To make transparent the commitments made by all the countries in the gray list. I didn't succeed last Tuesday But the apascal I hope next time you will make it because we cannot ask the others from transparency And not being transparent ourselves. So these commitments must be made public so that NGOs medias Parliaments citizens can watch this and control that they are really implemented and finally Again, it's for the finance ministers of the EU We must have sanctions because the list without sanction is not credible. We the EU as such the commission We are taking we are going to take sanctions. I will explain that in a few weeks from now. So this is the package Let's not have just a spectacular remark Nine less proves it doesn't work. No, it's more complex. Okay, Winnie beam. Are you now reassured that this list is going to help Well, there are steps in the right direction But if I was a school teacher asked to make a report I would say Promising but need to work harder You tell him you tell him because because you see Some of these changes like the blacklist you see there small and developing countries like Namibia like St. Lucia like Samoa a little island in the Pacific, but then serious tax havens really tax Have tax door dodging countries or where money is touched like the Netherlands like Switzerland are not there and then they create a gray list and Move out Countries European countries back on to a gray list out of the and this without letting everybody know Why what commitments have they made to come out of black to gray? so the the credibility of these lists and Ultimately the impact of them is questionable But also some of the changes that are being introduced on country public country by country reporting Some of the European countries like Ireland are not quite on board I Don't know but really there are steps in the right direction, but they are baby steps We want to see stronger commitments. We want to see that public country by country reporting means that Developing countries citizens there Can also see where profits are being made and where touch and how much taxes being paid But if it's just between the operational area of Europe, then those who are cheated the most are not getting Site line of sight of what is happening and let me conclude that this issue of tax avoidance Is not just about euros yens and dollars. It's about human rights. It's about people who are denied Access to the services. They need to lift themselves out of poverty because of tax avoidance. Okay minister Pascal Donahue What even you mean it did mention there that the Netherlands Luxembourg would be on the blacklist She's being polite because Oxfam did say at the same time that Ireland should be on the EU tax haven list as well Is Ireland a tax haven? the if you look at the definition that have been developed of a tax haven according to the OECD the Organization for Economic Cooperation and Development they lay out a number of different Principles that a jurisdiction must meet to be a tax haven and Ireland meets none of those criteria We are a country who has a very broad Tax base and a low tax rate on that broad base We have in politically independent Organization that collects our taxes and implements tax policy What is true to say is that we have an element of the proposition that we use To attract jobs and investment in our countries in other words our corporate tax rates of 12 and a half percent We have used that as an element to help Ireland deal with the Challenges that we can have by being a very small economy located on the edge of Europe But from my point of view what I want to do is ensure that we maintain our competitiveness But also respond back to the changes that I accept need to be made in corporate tax policy both nationally and internationally And I think the competitiveness of our tax rates is well understood But I also believe that many changes that we have made Does not get the credits and hearing that it deserves to So if you look at for example Country by country reporting we were one of the first countries to implement country by country reporting Of course, it's fair to say it's not public and the reason for that is we have a principle in Ireland that the affairs of An individual with tax authority should be private We are one of the first countries to implement mandatory disclosure requirements So in other words now if there's an organization in Ireland such as an accountant Involved in aggressive tax planning on behalf of a client. They need to inform our revenue commissioner of this We've eliminated many difficulties in our tax code such as stateless companies And as Minister for Finance in my last finance bill I've now put in place the legal provision to now go and implement all the provisions of the OECD and the BEPS process So I'm very committed to helping our country continue to be competitive And taxes and elements of us, but so is having a young educators Workforce that's as important and then deal with all of the issues That we acknowledge need to be dealt with But we also want to point to the progress that we have made in tackling many of those things Okay, Professor Stiglitz should Ireland be given credit for these having taken these steps and having moved towards Signing up to these international systems Well, the answer is really for the same that when you said, you know baby steps, but One has to understand the depth of the of the problems in Ireland but before mentioning that and put it in context Panama paper Panama papers and paradise papers brought home The importance of illicit activities people hiding The real problem with our global tax system. I mean that is a problem and a really serious problem but there is a problem of a global tax system that allows people legally To avoid paying taxes or reduce their taxes and has led to a race to the bottom In which there's just been another entry into that race to the bottom, which is the United States Lowering his corporate tax rate. So, you know, we know where this race to the bottom is going to end Ireland is a bad player in this You know 12% why not 10% somebody else's 9% 8% where does this end? And unless we get global cooperation it ends at zero and it's zero is when he said We won't have the money for infrastructure for addressing climate change for addressing poverty We won't have the money for any of the things our society needs. So we really need Global cooperation, but let me let me be more specific about Ireland The big case that everybody knows was the Apple case 13 billion dollars of Revenue that were generated all over Europe that were funneled into Ireland created a few jobs But we're stealing revenue from all the other countries of Europe And we've clear it was stealing revenue and to some extent jobs from other places in Europe because it was a secret agreement If that agreement had been transparent and open to every other company Europe would have had zero corporate tax revenue from American companies When it was exposed it was pointed out by Vestiger who has been a real champion on this and other things That it was illegal and they were engaged in illegal activity and Undermining the state aid which is trying to get a basic framework within Europe for fair competition What did Ireland do? Did it say we need 13 billion dollars and you did after what happened in the crisis you needed 13 billion dollars So what did they do they sided with Apple? Apple has used the same ingenuity to deliver those iPhones that you love so much to avoid taxes and Ireland did get tougher and so would it Would it Apple do move to the next European? Not EU tax of How shall tax avoiding country One of the one of the channel islands so you know what we see is deep commitment Commitment by a company that tries to make a pretense of corporate responsibility I say the first element of corporate responsibility is paying your taxes and Using that ingenuity to avoid taxes and the globalization system Has been used to make sure that we don't have double taxation It could have been used to make sure we didn't have zero taxation But the corporations didn't want it and what they didn't want we didn't get okay Apple it's worth pointing out says that it pays all the taxes it's supposed to in the countries that it owes it And they're not here to represent themselves, so it's worth mentioning that minister who just briefly can you respond to? Well, I'm here obviously to represent Ireland And actually many of the principles that professor Stiglitz outlined actually I do agree with and I gave him a bit of a fright when I walked in earlier on and I told the professor that I have many of his books in my office and They've educated me for many years on the discontents of globalization and Ireland strongly supports free trade We strongly support globalization But we recognize that if the discontents that the professor has referred to are not dealt with There runs a risk of that all been terminally undermined And where I agree with the professor is that International and then where needs be you cooperation is the best way in which we can respond back to that Where you'd appreciate I differ with the professor on this firstly Ireland has no intention in being part of a race to the bottom We have a good we've had a corporate tax fate now that has been unchanged for many many many years We're seeing other countries reduce it now there is now ours was already not the lowest in the European Union We have no plans to change it at all because we're not going to be part of what the professor has outlined and then Secondly in relation to Apple the reason why we took the stance that we did is because we do not do deals with individual companies Apple have been present in Ireland for 40 years as have many other companies And it is not in the interests of companies or investors that we have in Ireland are all the ordinary taxpayers that I represent To do any deal with any of them, and we don't okay While I know this is the source of fierce debate, and I'm involved in most of it myself I do need to use this opportunity to acknowledge that the objectives that we need to tackle we need to make progress on us And we are but it isn't Ireland's role or indeed ability to be a global tax collector What we can influence and what we can do we're going to do While retaining the competitiveness of a very small and very open economy Okay David Sarah I want to come to you to for a private sector view on this as well Will companies not always just go wherever they can pay the least tax? Absolutely, so my view is very simple. I think here in reality. We're lying to voters and I think business has to stand up and do numbers so for example and I just go through a couple of simple Numbers Google not to refer Apple in Ireland and I use Ireland's ability as a finance minister We can do this for same for Luxembourg and the Netherlands booked revenue of 22.6 billion euro 22.6 billion euro in 2015 They pay to Ireland only 48 million euro Island says I have a tax rate of 12 and a half percent is competitive There's only one problem in Ireland if you set up a business and the business is 100% controlled Abroad you basically pay zero taxes So it's correct within tax law in Ireland. They are correct. There's only one problem What happens if everybody were to book their foreign subsidiary in Ireland and that's what happening now so running the numbers this is Realized 60 billion euro tax illusion evasion I consider board the line to criminal in In three member states, of course, they're not gonna say and they're gonna put themselves on the blacklist It's easy to put some more island or someone else And why is the system 100% rated because too many people benefits out of it the consultants the auditors all the bureaucrats and So I think it's very simple You need to have by law that any corporation that is listed and wants to have global standard Give me one number total tax paid Where total number if you were if you had asked this to Facebook take Facebook they pretend to be good citizen now. They paid 4,000 pound 4,000 pound of taxes in 2014 in the UK if I take Reported if I add every annual report of Facebook Globally and I see what's the tax paid the number. It's zero. They post 10 billion dollar profit So explain to someone if I add every annual report that you file in every country and you pay zero taxes So it's very simple. If you are a listed company in the world, you must give me one number Total tax paid in which country and all this discussion ends to the transparency is that is the key element there We're going to have to take a short break But do join us after the news headlines for more from this special debate from the world Economic Forum in Davos You're welcome back to Davos and this special debate from the world It was all going so well Welcome back to the world Economic Forum in Davos and this debate We're discussing the subject can global tax avoidance be stopped before the break David Sarah was saying the transparency is what's needed here for us to Understand where we can where we can where companies are paying their tax When you've been you may you want to go on that? Yes, actually now. I want to defend Ireland represent Ireland after all I was educated by Irish nuns but what I want to say is that This is a huge problem Money is flowing out of countries out of the productive economy and being stashed in tax havens and tax denying people vital services It's like water flowing out of a leaking bucket. We have a global system that is really Faulty that is old that hasn't been changed over a long time. What we need is not Just little steps here and there. We need global Cooperation on a global corporate tax reform. We can't do this We can't stop this harmful tax competition without global cooperation. My issue is that Countries got together rich countries got together and started a BEPS process That has helped them make little fixes in their own economies for themselves benefit from their own companies leaving out the needs of a Big part of the world developing countries you could you had in the BEPS process countries like Luxembourg, which is a tax haven sitting there negotiating a reform and A country like Bangladesh like Vietnam not having a seat at the table So we need and the place to do this is the United Nations because that's where we all can sit in equality And put our interests on the table and negotiate a new tax system. So that's one then on transparency I can't agree more that we need that that's an important part of it But it's not the end of it transparency is important But you need more than that you need rules to govern how these companies behave Let's not forget that really we are in a system where Grid is good. This is the kind of economy. We are in where companies are encouraged to maximize for shareholders And that's why they dodge tax and that's why they depress wages and that's why the slush labor rights It's all about maximizing for shareholders. So unless we really look more broadly and fix an economy That's incentivizing tax dodging. We will not solve this problem Yeah, I must be see you are a European commissioner now You're a former French finance minister the French president said here yesterday his plan he wanted, you know companies those big digital companies to Report how much they are in each country so they can so that they can pay tax on it accordingly Is this something that the European Union can help with? Yes, as I said, we are going to make proposals by Beginning of spring in order to make sure that Digital companies pay their fair share of tax no more. No less where they create values and profits as far as we know today the average Taxation on those companies is 9% Compared to 23 for I would say normal company. I'm talking about average and there is a problem there of level playing field Which is something we can understand because our corporate tax system is a hundred years old And it's not adapted to digital companies So we are going to make ambitious proposals as well on common corporate tax base and also on specific taxation But if I come back on the debate First I would like to tell my two professors here That I'm not so sure that we're making little steps I think we're making consistent steps and that really the wind the mode has changed and You must not blame those who have made progress when I speak with Pascal and with his predecessor I can see that there is a huge change in the Irish attitude towards the European and global tax system But I would insist on three points the first one is about a CCTV not about public reporting Country by country reporting CBCR. It must be made public I don't accept the idea that there is a contradiction between competition investment And transparency you can have both when I was finance minister in my country I established CBCR for the French banks are they less competitive than the Spanish Italian Or Portuguese or green banks. No, so that's the first point We have established CBCR between administration. We need to move further second There is a notion that needs to be introduced if I look at the Apple case The problem is not so much that the tax rate is twelve point five percent in Ireland That's a national sovereignty and as you said you don't want to add more the problem is the Effective tax rate the tax rate which is effectively paid if my colleague and friend Margaret Vestagge raised the case It's because she said that the effective tax was zero point zero five percent The OECD does disagree with that the OECD says that Ireland's fact of tax rate is something just under twelve percent No, no again again. There is a decision from the Commission and and and even Apple took a provision so it takes it's for serious So I think that what David is said finally should be taken for serious the best way and it's linked to CBCR is to look at Where this or that company acts and where it pays taxes? That's an economic approach, which would be I think as performant as the BEPS approach because the BEPS approach is about Commitments institutions and yes, if you look at the BEPS approach, there is no tax even in the EU certainly not But if you look at the economic approach, you see that there are some countries which are let's say more attractive than others Okay, a minister who just come to you very quickly. I'm not the effective tax race Well had the OECD as you have said have acknowledged that our tax code and tax base is different But more importantly from my as importantly from my point of view the revenue commissioner in Ireland and Our controller in order to general who are independent bodies who both collect tax and then assess the implementation of policy I've said that the average effective tax raise in Ireland when it comes to corporate tax raises approximately 10% We do not have the lowest tax raise in the European Union when it comes to corporate tax And then we do not do deals either regionally or in policy areas of that rate Okay, and that has been the bedrock of much of what we have done But I do want to emphasize again that while I am contending very strongly The legitimate role of a policy like that to deal with the scale and size of our economy amidst a huge global marketplace I also want to acknowledge and I appreciate Pierre acknowledging the progress that we have made That we do want to deal with matters to ensure we continue to part to be part of good and then best practice And some of the changes that were made and I have made many of them now myself as minister for finance Would made at a time when our economy was in grave difficulty And we made those changes because it's part of what our country wants to be about To make sure it matches up with the values of our citizens creates jobs and then deals with Many of the matters that have been raised by the panther. Sorry, and I'm speaking as a European citizen So I'm a European citizen too. Yes, and to nationality. So am I and it now So it's very simple Within Irish tax code if you have a multinational that is 100% directed outside Ireland De facto, you're not taxed Hence and this is the law and I'm happy to challenge you in rule of law so Google 22.6 billion revenue in Europe 2015 how much taxes they paid in Ireland 48 equates to 0.002 per a deal than Apple hence Every study and is the same and I run my usage Regulated business by the CBI in Ireland. So I'm a businessman in Ireland. It's very simple Island if you are in Ireland it you charge to have an half a cent if you are someone global you put everything there They don't see you Now this has equated to more than 20 billion euro elusion per year of European taxes Then as European citizen, I look at an Irish citizen Since you've joined the European Union Island had net contributed to the new budget 150 million euro Why are you allowing illusion so less revenue losses to European citizen of 20 billion? It's a ratio that is 500 times per year when I say And I love Ireland and have a businesses line and it's a great business community tax Everyone no matter where they come from up 12 and a half percent because if you tax people at 0.002 This is a joke and you're okay Well, just let the minister respond to that And you know we're delighted that you have your business located in Ireland and you find it's such a good Such a good environment to do business in which is grace and I speak as an Irish citizen And I was finance minister. I'm humbled and proud to be both and as a European Citizen too and as a proud member of the European Union and a committed member of one And I go back to my core point while I can I cannot and will not comment on the tax affairs of any one company It's not appropriate for me to do so with finance minister I believe that companies and large corporations should pay their first share of taxes and should pay an effective raise of tax And I believe that needs to be done in a Coordinated and global manner and I do feel and I think Pierre was making the case and I do agree with him on this That changes that we have made through the OECD Like exchange of information like country by country reporting and we haven't even touched on what's happening in America at the moment And I suspect the professor will in a moment Could and will be part of how we make progress and matters like this. Okay first thing Let's let's I'll just let you come in because you had been looking to make a point there quickly if you can I just wanted to say that Tuck is don't vote for Christmas So when there was a BEPS process and the country sitting around the table Included tax havens they were not going to this define a tax haven as themselves So we really Need to have a global process where every country is at the table to make these new rules That's for me what I see here We can keep pinning Ireland on 0.00 and another one on zero but the truth is that to Curve this race to the bottom We need global cooperation and that is where I fault many countries many leaders for not taking this forward There's now we've been arguing this and now there's going to be a global tax forum in New York in February But what but we don't want to talk shop We want a forum with teeth to define some new rules and to enforce cooperation in this area And let me say a very famous Nobel Prize-winning economist once said that The idea that lowering the corporate tax rate Will spur investments is fundamentally flawed and that takes I just want to say that it is so right There are many reasons why companies invest not just a low tax rate. Well, that's a perfect point to discuss I don't know who that's the United States. Is this a race to the bottom working out? Yeah So let me try to first put this in a little bit broader perspective the critical issue here are the words Where value is created and as we move into a more complex economy It's going to be more and more difficult to answer that question. So for instance An important part of value today is the patents and You can move those patents anywhere in the world that you want and you can move them to a Real tax haven works tax to zero So that's why the what we call the transfer price system where you make up numbers Can't work in a globalized economy I mean think about what the transfer price system is supposed to be what an arms-length Transaction so what would be the value of a shirt without a sleeve? And You know you start thinking about a car without tires without a chassis There's no number you can put so what we've created is a system that cannot work in a world of globalization now within the United States different stakes have a Different have corporate tax rates And the question is how do you allocate the Where was value created and we realized you couldn't use the transfer price system a Shirt might go back and forth across state boundaries many many times And so we've created a formulaic approach which says that you have to look at the total profits And you look at where are the employees? Where is the capital? Where are the sales you have some formula it's rough justice But it's better than the no justice system that we have today So, you know when I was in the White House 20 years ago I said the system was broken and it was true then and it is now even more broken The problem with BEPS is that it is trying to fix a broken system by the guys who are making the profits out of the system and so they don't want to change the formula what they've done is they done a little bit about Profit-shifting through that you know a lot of fine points, but the big picture they have not been able to address in years now well said the the the so the the the Question is to expect global cooperation on this Especially when you have the tax avoiders being the main people at the table is not something that you can expect what I would like is Europe to take the lead and To say this, you know, we know you're we know the United States under Trump who was our Tax avoidering chief. How could we expect our tax avoidering chief to be a constructor? He's not he's not here either The the answer is Europe is going to have to take the lead and a global minimum tax Imposed by Europe would be the way forward. What do that would mean would be the following? Take the transparent you list the total profits of the corporation you say Every corporation has to pay at least 15 20 percent of their revenues You decide where the revenues were generated, but you have to pay at least 15 or 20 percent That would stop the race to the bottom Okay, and that would generate a lot of revenue and this is a European citizen And this is the point as well that was made in a report this commission for the IMF about taxing digital companies These are too very respected economists as well saying they don't believe the international tax system is fit for purpose. Can I ask if you see? Just take this this tells you you can fix everything actually not quite but I Was smiling listening to you both criticizing BEPS Because you're probably partly right, but not totally I think that is An effort that deserves some esteem, but precisely you want to go Well beyond and to take the lead. That's what we try to do That's what I try to do with Margaret Vestager. We have a team work She repairs what doesn't work I try to prepare the legislation of the future and I will take a few examples of what we've done and can do First I come back to it public CBCR. There is a proposal from the Commission on the table I would like it to be adopted I think that's absolutely Fundamental and I think that we need help there also from NGOs and the civil society second We need to establish a modern corporate tax race the tax system and that means two things to me first common corporate tax base Because the economy of today is not the economy of one century ago and second an ambitious way to tax the digital economy And that is absolutely necessary and force Everything that I try to do through this modern Corporate tax system is to to to take into account not only the nominal tax rate but the effective tax rate and I welcome the fact that Pascal can work About it. We need that and finally untransparency. I will give you one more idea because if we've got a effective taxation It's the beginning of what Joe Stiglitz called for We want also transparency from intermediaries. These are bankers lawyers legal advisors financial advisors who sell Aggressive tax planning schemes to clients I'm not saying that these professions are such a bad certainly not But they need to be transparent and there is a proposal also on the table which says Okay, you must make transparent to the administration of your client the Tax scheme that you have sold him. I would like and I want this proposal to be adopted So you see We cannot solve everything. We certainly cannot be too aggressive We was welcome Donald Trump tomorrow. I won't be there, but it's important Because US must come to multilateralism, but the EU wants to be the champion Do you want to be the leader? We must not only do beps we must do beps But plus plus plus and that's why we have taken so many initiatives in the last three years David So this is a an issue particularly when it comes to digital companies the idea of the tax system just being out of date How do you tax the company's companies? Well two points? I want to make the first one I think from the commission point of view they just spent a couple of years implementing a new regulation Me fit to will have an impact of probably three four billion euro Savings per year and we're dealing with 60 billion tax illusion for the last 10 years So it's 600 billion accumulated. So my view is do the commission is stop talking action If next year we have another 20 billion tax illusion. Yeah, I think eventually even private company will start suing The second message is I think we all are citizen never invest in company They do not report their global tax rate country by country If I were to be an elected citizen, I'll very simply go to the G20. I says, okay You're in the G20 every G20 annual report gives me how much taxes any comparison pays in each country That's it. And then you can add up the numbers The third point I make now on taxation of digital. It's very simple 200 years ago if you are Exxon and you develop a technology to suck oil and back then Oil was the key resource. You'd go in Saudi Arabia. Pay a royalty today data It's the new oil. Well, I'm sorry. They are now sucking data out of each of us and no one is getting paid So it's very simple if you want to suck up data You pay your state and that's where the country and to stand up and why don't they do it? Because they all are part of this rig system where for few jobs They're all happy and to take a picture with the CEO of Apple or Google and Facebook and Donald Trump to sell their citizen So it's very simple as a citizen We must rise and we must say you government protect the privacy of my data Where are they what corporation do with it and as we've done for telecom airspace? We can't touch airspace and has been option. Perfect. You do the same So anyone in private business could do it and the reality. Why aren't they doing it because government are colluding It's as simple as that and this is leading to rise in populism because the average guy on the street It's not stupid. He gets it and he's fed up If a Spanish company is making garments clothes in Vietnam and Selling them online and being bought in America. Where is the tax paid? This is the question that Joe was talking about We work with government workers in countries like Vietnam hard-working people working 80 hours a week They pay their taxes. They live in poverty These people their country where the tech where they make those clothes Needs a share of that tax in order to create that environment they wrote pay for the taxes the rods the Electricity the the infrastructure that that country puts up that this Spanish company benefits from so it's important Have the transparency first of all of the production line where the product is made Where the capital came from where the sale is made and to decide on a fair way of sharing that tax so that poor country Benefits as much as possible. Then secondly this on the question of transparency. I find it strange when the argument for Privacy is made by companies. They don't want us to see Across how they are making their money Almost like how I can insist on privacy that I don't take off my clothes in public It's not the same we need that we need that transparency of how money how wealth is created They can't make the same argument as individual privacy that I Ask for in my personal life a company is not a human being It is about making money and it's about jobs and fairness in an economy. Then the last point I wanted to make is about The Europe and its leadership. I agree that Europe should lead But as I'm saying it's still about Fairness globally the biggest losers are poor countries a hundred billion Dollars every year is lost to developing countries because of channeling to tax havens This is from Ankh Tad these countries Cannot sit and wait for Europe to decide to lead we need a global solution Presidency what's going on this? Yeah, I just want to emphasize Winnie is absolutely right and I want to emphasize the challenge in trying to develop a global solution to the problem because the current framework BEPS is Being managed through the organization of the OECD, which is an organization of advanced industrial countries which cannot Really address in an equitable way the problem the global problems where we have to share and Some way and based on some principle where value is created with the developing countries And so the developed countries are under enormous pressure from their governments We see it in the United States where after it was exposed the the Google the Apple Tax avoidance Everybody they brought the president of Apple to Congress and they pretended nothing had happened Are you the champion of America? No, you're not because You're either depriving Europe of tax revenue or you're depriving America of tax revenue This this was you know and then he had You might say the almost the goal to say I will bring back the money when you have a Rate tax rate that I approve of and It's not for Individual countries to make in companies to make that decision now the point I the UN Had a process called finance for development where they recognize that development requires a lot of money And they realize that today aid is not going to be there and so we've invited companies to come into developing countries and Said that this is going to be a source of revenue And it hasn't proven out to be and so the question was how do we reform globally the tax system? And there was a discussion about the right form in which to do this and unfortunately The United States supported by Europe took the view that the tax avoiding countries the United States and the other countries Should be running the revised system and India took the view led the Developing countries and almost all the world agreed with India that that was the way but unfortunately We live in a world where power of power. Where are the United States one and mr. Pastel donnie who? Yeah, I met the OECD About this and other matters were members of the OECD and I must say in fairness to them My sense is they had a great awareness of the global agenda and the development pressure Then perhaps has been acknowledged here I think they are aware of the plates that are shifting in Terms of the comments that we've made about taxation and the need for fair taxation Like I stand very firmly by the principle for fair and the fact effective taxation If you look at where we are in Ireland at the moment We have 1% of income payers of income earners in Ireland pay 25% of income tax We've changed our minimum wage four times. We've increased it four times As we've come out of our crisis over the last two years We've seen income inequality in our country begin to improve as we are making the interventions We need to to deal with the the need you know spawn back to the needs of our citizens So if I feel that about the people that I'm lucky enough to try to represent I therefore feel that large companies should pay their fair rate of tax But I think a challenge that we're going to have here is in the digital area How do we define the digital economy? Because there's no longer such a thing I was content as a digital economy We now have economies that have become digitised So it's not going to be as simple as saying here's four companies They need to pay more tax What it's going to be needed is in Europe and in Ireland We apply taxes to economies or to sectors of economies And of course we are going to get into challenges then regarding how do we define a digital transaction If the transaction that's digital in nature if it's happening in a small company Should they be taxed the same way as a larger company? And they're all the areas that we're going to need to work through and tease through Both through the proposals that Pierre will be publishing in March or April And then the work that the OECD will do afterwards Okay, I'm conscious that we want to take question from the audience And we're running very close to time So if we can just I think the trade minister from Panama is here If we can if we can get a microphone perhaps for him to ask a question here we are at the front row Thank you very much Hello, I look to see you that I was a minister of finance from Panama I have one comment and one question to anyone of the panellists The comment is the following Panama was included in the EU gray list Blacklist sorry Because the EU found that the call center call center tax regime of Panama was harmful When at the same time we were working very hard with the OECD on actual five of BEPS and Rebuilding all of the Panamanian tax reams And by the way The tax incentives offered by the the call center regime in Panama, which is a real regime with 15,000 employees The same tax incentives are offered by all the Latin American countries that have the call centers And we make a green we we agree with the EU to review the tax reams The call center tax regime of Panama. We hope that all of the Latin American countries will do the same The question is the following We all know that the biggest Harmful tax regime in the world is a passive income regime of the United States for non US Persons, and we are ever going to see The largest economies in one of the blacklist or is the blacklist only for small countries Okay, professor segments. Well, first I agree that the United States is a major major problem and it's an ever, you know The United States forced all the other countries including Switzerland to engage in automatic exchange of information of tax information But refuses to do reciprocal. So Real estate is the real center of tax avoidance and evasion in the United States and money laundering and It is a real problem, which Unlikely that will address in the next couple years, but I also want to say, you know after the Panama Papers came out I was asked by Panama to had a committee to ascertain to Determined how could Panama become a good citizen and in terms of tax avoidance and all the other Aspects of tax compliance and I Agreed with one of the really active Anti-corruption experts of from the OECD and At the beginning of our proceedings we said the first condition that we have if we're going to have an investigation into transparency is the results of our Proceedings had to be transparent We will give the government time a month or whatever you wanted to respond But we wanted to make sure that our report was transparent so that everybody could see what was wrong And the answer we got after we waited weeks and weeks and weeks was no We're not going to be transparent and so what mark bife and I did Mark python. I did was to write the report. We had to resign. We had no choice. We could not be a participant in a Whitewash of a non-transparent regime. So what we did is we report a Road of report of overcoming the shadow economy of what we would have said Have we been allowed to say it as part of the advice to Panama? So you can get this downloaded and Frederick I birdie shifting As as a model of what countries ought to do including the United States and that's why I accepted it because I wanted Panama to be a model for the United States didn't work out. Okay, just for a moment there Just for television purposes. I just need to conclude this We will continue right up to the time and I'm going to ask all the panelists to come to their conclusions in just a moment But just for the purpose of television needs to just say goodbye So thank you to all of my guests for participating in this debate from the world economic forum Thank you to you at home for watching stay with us on France 24 for now. Goodbye from Davos Okay, just just before we come to conclusions. I just like to play you a short video our reporter I'm Elco spoke to some people in Paris about this issue just to give us an idea of what people You know that aren't in this room are saying about the issue of tax evasion their own morality and these people don't have much unfortunately, I Think there's a part of the banking system that leaves the door open to tax avoidance especially for the rich clients I don't think it's something offered to everybody I think the state should put more barriers in the way of companies Because they have too big an impact on the economy They're not judged like everyone else They have a special status And it's not fair I think the financial advising profession needs to adhere to a strict moral code and then at an international level There needs to be a bit more bravery from certain institutions and certain governments Challenge you are with three minutes left. So I haven't got about 30 seconds for your mask of easy What should we be taking out of this debate? First there was a debate about the limits and merits of peps And I think we must be fair It's not a panacea, but it shouldn't be blamed. It would be a paradox that Progress even small are blamed second, I think the EU is not OECD. It's it's much more ambitious than OECD And I hear that cold and we are trying to answer it and for example about the United States The United States was in this screening process I think the screening process was made honestly so that proves that the problems are a bit different And we must address these problems which are a bit different and finally Even if we think that the EU is so important and I do So committed and it is we need also To be conscious of one of our own limits is that on tax matters we decide by unanimity at 27 And it is not possible anymore Frankly speaking, we need to move to qualified majority voting because we cannot accept that the veto of one Blocks forever the common will of all and that's very important to change the rules If we want to be as ambitious as people call us to be okay, David Sarah for me is very simple Every corporation in the G20 to report how much tax they paid in local currency country by country And I give you a simple example. I know Google in Ireland 22.6 billion revenue only 5,000 employee. So each employee in Ireland in Google generates 45 million revenues and Hence there's only one way tell me how much taxes you pay in each country Every corporation and every citizen through the pension fund mutual funds ETF if you don't see the number I'm sorry. I blacklist the institution because before we wait for politician to agree That steps OECD and all this acronym. There has been 10 year of 600 billion euro tax illusion 6 trillion euro as a result It's time to act no more words and it's up to citizen to stand up. Okay, that's good I represent country that has over 2 million people at work within us that small to medium-sized countries Have a right to be competitive as well. It's not just to preserve of larger countries and We and Ireland will do that in such a way That allows our country to be competitive Allows us to attract investment to create jobs in our country while at the same time Dealing with issues that we ourselves want to deal with and what I want to do when I'm doing here And I'm delighted to be participating in this debate is point to what Ireland is doing Point to how we use it to create jobs, but also acknowledge I want to the work and progress that we have made over the last number of years to tackle issues that we know Needed to be tackled. Okay, when you be in real Yes, we have to understand that The injustices in our tax system are embedded in an economic model that Rewards those at the top who have wealth are not hard-working people at the bottom. They are linked and We have the tools we have the knowledge we can fix this tax system and make it just but We lack the courage and the political will to do it Okay, all the things that we has mentioned on Bepps. I acknowledge the progress of Bepps, but Bepps Didn't take into account those needs of developing countries who lose more than rich countries through tax avoidance Okay, we need to do a last word and a word if you can So the right of a small country to be competitive is absolutely It's important Ireland did a good job by being competitive in developing a good education system But stealing jobs and tax revenues for other countries should not be allowed So there are bases and that's why the state aid Provisions of Europe are designed to stop exactly that kind of unfair competition. Okay That would give two more points. What one is one more beps was a move in the right direction Whether it's small or big is not the issue. The question is it's far far from enough and the basic system is broken I think the basic system is broken the transfer price system can't be made to work and the Corporations who are very powerful and influential won't allow a change in the set tax system unless citizens Really get out there and express their voice and their indignation of the kind of outrage That was being mentioned earlier of companies paying point two point oh two percent of GDP Not bearing and trying to pretend to be good corporate citizens Okay, it's only outrage that will stop and reform the system. Okay. Thank you very much to all of you for your time Thank you for you here in the room as well